Question

1. Prepare the necessary adjusting journal entries for items a through h. Assume that adjusting entries are made only at year-end.

[The following information applies to the questions displayed below.]

Wells Technical Institute (WTI), a school owned by Tristana Wells, provides training to individuals who pay tuition directly to the school. WTI also offers training to groups in off-site locations. Its unadjusted trial balance as of December 31, 2017, follows. WTI initially records prepaid expenses and unearned revenues in balance sheet accounts. Descriptions of items athrough h that require adjusting entries on December 31, 2017, follow.
  
Additional Information Items

An analysis of WTI's insurance policies shows that $2,674 of coverage has expired.

An inventory count shows that teaching supplies costing $2,318 are available at year-end 2017.

Annual depreciation on the equipment is $10,698.

Annual depreciation on the professional library is $5,349.

On November 1, WTI agreed to do a special six-month course (starting immediately) for a client. The contract calls for a monthly fee of $2,800, and the client paid the first five months' fees in advance. When the cash was received, the Unearned Training Fees account was credited. The fee for the sixth month will be recorded when it is collected in 2018.

On October 15, WTI agreed to teach a four-month class (beginning immediately) for an individual for $2,461 tuition per month payable at the end of the class. The class started on October 15, but no payment has yet been received. (WTI's accruals are applied to the nearest half-month; for example, October recognizes one-half month accrual.)

WTI's two employees are paid weekly. As of the end of the year, two days' salaries have accrued at the rate of $100 per day for each employee.

The balance in the Prepaid Rent account represents rent for December.

WELLS TECHNICAL INSTITUTE Unadjusted Trial Balance December 31, 2017
	Debit			Credit
Cash	$	27,094
Accounts receivable		0
Teaching supplies		10,420
Prepaid insurance		15,632
Prepaid rent		2,085
Professional library		31,262
Accumulated depreciation—Professional library				$	9,380
Equipment		72,935
Accumulated depreciation—Equipment					16,675
Accounts payable					34,976
Salaries payable					0
Unearned training fees					14,000
Common stock					14,000
Retained earnings					52,277
Dividends		41,684
Tuition fees earned					106,293
Training fees earned					39,599
Depreciation expense—Professional library		0
Depreciation expense—Equipment		0
Salaries expense		50,022
Insurance expense		0
Rent expense		22,935
Teaching supplies expense		0
Advertising expense		7,295
Utilities expense		5,836
Totals	$	287,200		$	287,200

Required:

Answer 1

	Wells Technical Institute
	Journal Entries
	for the period ended 31 Dec 2017
	Adjusting Entries
Date	Account Title	Dr Amount	Cr Amount
31-Dec	Inurance Exp	$2,674
	To Prepaid Exp		$2,674
	being the prepaid exp recorded
31-Dec	Teaching Supplies Exp-$10420-$2318	$8,102
	To Teaching Supplies		$8,102
	to record the supplies
31-Dec	Depreciation Exp-Equipment	$10,698
	To Accumuated Depreciation Exp-Equipment		$10,698
	to record the deprecaition exp on equipment
31-Dec	Depreciation Exp-Professional Library	$5,349
	To Accumulated Depreciation Exp-Professional Library		$5,349
	to record the depreciation for professional library
31-Dec	Unearned Training Fess-$2800*3	$8,400
	To Training Fees Earned		$8,400
	To record the unearned training fees
31-Dec	Accounts Receivable -2.5 months*$2461	$6,152.50
	To Tution Fees Earned		$6,152.50
	to record the WTI accurals
31-Dec	Salaries-$100*2 days*2 Employees	$400
	To Salary Payable		$400
	to record the salaries accrued
31-Dec	Rent	$2,085
	To Prepaid Rent		$2,085
	To record the prepaid rent